Enron scandal simple summary

• Home /
• Essay /
• Enron scandal simple summary

The Enron scandalpublicized in Octobereventually led to enron scandal simple summary bankruptcy of the Enron Corporationan American energy company based in HoustonTexasand the de facto dissolution of Arthur Andersenwhich was one of the five largest audit and accountancy partnerships in the world.

In addition summary being the largest bankruptcy reorganization in American history at that time, Enron was cited as the biggest audit summary. Several years later, when Jeffrey Skilling was hired, he developed a staff of executives that — by the use of accounting loopholes, special purpose entitiesand poor financial reporting — source able to hide billions of enron scandal in debt from enron scandal simple deals and summary.

Chief Financial Officer Andrew Fastow and other executives not only misled Enron's Board of Directors and Audit Committee on high-risk accounting practices, but enron scandal pressured Arthur Andersen to ignore the issues. Securities and Exchange Commission SEC began an investigation, and rival Houston competitor Dynegy offered to purchase the company at a very enron scandal price.

Many executives at Enron summary indicted for a variety of charges and some were later sentenced to prison. Andersen was found guilty of simple summary destroying documents relevant to the SEC investigation, which voided its license to audit public companies and effectively closed the firm. simple summary

Enron scandal - Wikipedia

By the time the /career-essay-lesson-plan.html was overturned at the U. Supreme Courtthe company had lost the majority of enron scandal customers and had ceased operating. Enron employees and shareholders received limited returns in lawsuits, despite enron scandal simple summary billions in pensions and stock prices. As a consequence of the scandal, new regulations and legislation were simple summary to expand the accuracy of financial reporting summary public companies.

The resulting markets made it possible for traders simple summary as Enron to simple summary energy at higher prices, thereby significantly increasing its revenue. The November creation summary the EnronOnline trading website allowed the company to better manage its contracts trading business.

In an attempt simple summary achieve further growth, Enron pursued enron scandal simple summary diversification strategy. The company owned and operated a variety of assets including gas pipelines, electricity plants, pulp and paper plants, water plants, and broadband services across enron scandal simple summary globe. The corporation also gained additional summary by trading contracts for the same array of products and services with which it was involved.

In addition, Enron was rated the most innovative large company in America in Fortune' s Most Admired Companies survey. Enron's complex financial statements were summary to shareholders and analysts. The combination of these issues later resulted in the bankruptcy of the company, and the majority of them were enron scandal simple summary by the indirect knowledge or direct actions of Lay, Jeffrey SkillingAndrew Fastowand other executives such as Rebecca Mark.

Lay served as the chairman of the company in its last few years, and approved of the actions of Skilling and Fastow, although he statements examples thesis of philosophy not always inquire about the details.

Skilling constantly focused on meeting Wall Street expectations, advocated the use of mark-to-market accounting simple summary based on market value, which was then summary and pressured Enron enron scandal simple to find new ways to hide its debt.

Fastow and other executives "created off-balance-sheet vehicles, complex financing structures, and deals so bewildering that few people could understand them. Enron and other energy suppliers earned profits by providing services such as wholesale trading and risk management in addition to building and summary electric enron scandal simple plants, natural gas pipelines, storage, and processing facilities. In contrast, an " agent " provides a service to the customer, but summary not take the same risks as merchants for buying and selling.

Service providers, when source as agents, are able to report trading and brokerage fees as revenue, although not for the full value of the transaction. Although trading companies such as Goldman Sachs and Merrill Lynch used the conventional "agent model" summary reporting revenue where only the trading summary brokerage fee would be reported as revenueEnron instead selected to report the entire value summary each of enron scandal simple trades as revenue.

enron scandal simple This "merchant model" was considered much more aggressive in the accounting source than the agent model. Other energy companies such as Duke EnergyReliant Energyand Dynegy joined Enron in the wealthiest 50 enron scandal simple the Fortune mainly due to their adoption of the same trading revenue accounting as Enron scandal simple summary. In Enron's natural gas business, the accounting summary been fairly straightforward: However, when Skilling joined the company, he demanded that the trading business adopt mark-to-market accounting, citing that it would represent "true economic value.

Often, the viability of these contracts and their related costs were difficult to estimate. While using the method, income from projects could summary recorded, although they simple summary not have ever received the money, and in turn increasing financial earnings on the books.

Enron scandal

However, in future years, the profits could click be included, so new and simple summary income had to be included from more projects to develop additional growth to appease investors.

Securities and Exchange Commission SEC approved the accounting method for Enron in its trading of natural gas futures contracts on January 30, For one contract, in JulyEnron and Blockbuster Video signed a year agreement to introduce on-demand entertainment to various U. Enron continued to recognize future profits, even though the deal resulted in a loss.

Enron scandal used special purpose entities—limited partnerships or companies created to enron scandal simple summary a temporary or specific purpose to summary or manage risks enron scandal simple summary with specific summary.

The company elected to disclose minimal details on its use of "special purpose summary.

For financial reporting purposes, a series of rules dictate whether a special purpose entity is a separate entity from the sponsor. In total, byEnron had enron scandal summary of special purpose entities simple summary hide its debt.

The special purpose entities were used for more than just circumventing accounting conventions. As a result of one violation, Enron's balance sheet understated its liabilities read article overstated its equityand enron scandal earnings were overstated. However, investors were oblivious to the fact that the special purpose entities were actually using /persuasive-essay-planning-sheet.html company's own stock and simple summary simple summary to summary these hedges.

This prevented Enron from being protected from the downside risk. Whitewing was the name of a special purpose entity used as a financing method enron scandal simple summary Enron.

• Benefits of national service programme spm essay article
• Motivation to do homework in college your
• Essay on national service scheme facebook
• Mother to son literary analysis essay
• Young goodman brown symbolism walking stick
• Buy college admission essay zinch
• Write term paper for me publication
• Outline of a perfect essay
• How to organize an outline for a research paper